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Production firms were more optimistic than service sector businesses, according to the survey

Business optimism is climbing even though the Scottish economy remained virtually unchanged in the spring, a Bank of Scotland survey has suggested.

Its latest business monitor found firms' expectations at their highest level for more than five years.

This was despite a flat performance in the three months to the end of May.

The bank said expectation levels for the next six months suggested the private sector economy would grow in the second half.

Survey results for the last quarter found 28% of firms said turnover had increased, while 36% reported it had remained static. The remaining 36% experienced a decrease.

Export activity improved

This gave a net balance of -8%, which was a slight fall from the -5% of the previous quarter.

Both the production and service sectors showed a slight deterioration in performance, with volumes of repeat business down slightly.

However, trends in the amount of new business were much better, with an overall net balance of +6% compared to -2% of the previous quarter.

Export activity also improved strongly in the latest three months.

Firms' assessment of their prospects in the next six months swung strongly upwards, with expectations for turnover in the next six months showing an overall net balance of +13%.

This was a large improvement on the previous quarter and the same period a year ago.

While 49% of respondents expected turnover to be static in the next six months, 32% expected it to increase. Only 19% said they expected a decrease.

'More vigorous growth'

Production firms were more optimistic than service firms.

Expectations for future export activity also rose significantly, according to the report.

Bank of Scotland chief economist Donald MacRae, said: "Despite the apparent moderate performance in spring, business expectations for the second half of 2013 have improved significantly to the highest level for five-and-a-quarter years.

"A return to more vigorous growth in the Scottish economy is dependent on an increase in confidence in both consumers and businesses."

He added: "Some of this confidence building appears to have begun in the first six months of 2013. If it continues throughout the year the Scottish economy should record a year of growth in 2013."